Surna Blog

California's developing Cannabis industry

Cannabis legalization and decriminalization is one of the most interesting topics of this decade. Over the last few years, more states are lifting prohibition either for medical or adult-use. And the results have been astonishing. In just the last eight months alone, Colorado has achieved $620 million in sales and sent $95 million to state coffers. But what Colorado has demonstrated is just the tip of the cannabis iceberg.

In November,2016, California voted yes on Proposition 64 (also known as the Adult Use of Marijuana Act, or AUMA) to lift prohibition and establish an adult-use cannabis market, causing those in the industry (and many outside the industry) to take notice. Currently, California has the sixth largest economy in the world and hosts a population of close to 40 million people, creating what seems like unlimited potential for the future of cannabis. When one considers theimpactcannabis has had on a much smaller state, like Colorado, it is easy to understand what legalization in California could mean,not only for the industry, but also for the citizens of the state.

However, the road between passing proposition 64 and a fully functioning adult-use cannabis market is long and will be bumpy. It is rare for a completely new industry to appear out of nowhere, especially one as heavily regulated and monitored as cannabis. And so, California legislators have been working diligently to develop rules and regulations that will strike the balance between a well-regulated industry and one open enough to undercut the robust black market already in place.The good newsis thatCalifornia regulators are optimistic, setting a date of January 1, 2018,as the officialday they begin issuing licenses.Before that can happen, much must be done.

So far, the state has been able to reconcile its two, somewhat contradictory laws concerning the medical and adult-use markets, implementing the Medical and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) to rectify the contradictions between existing Medical Cannabis Regulation and Safety Act (MCRSA) and Proposition 64/AUMA. This new legislation sets up a general framework and creates one central piece of legislation to support both the medical and adult-use markets. Ithas many pieces but the main points for cultivators are that it allows for some vertical integration, meaning largecannabusinessesmay develop,sets up the Bureau of Cannabis Control as the regulatory body,and existing licensees get first priority for licensing under MAUCRSA.

This is no small undertaking for state legislators. While MAUCRSA has been passed, there are still manymatters to address. Now that the two existing regulatory structures are condensed, agencieslike the Food & Drug Administration, must now take over to create further regulations. There is a myriad of topics that have to be considered from safety requirements to water and energy usage to advertisingregulations that require the cooperation of many governmental departments and they all need to beaddressedbefore the market opens a mere four months from now.

While regulators and state legislators are working hard to define the regulatory path forward in California,investorsandentrepreneursareinterested in setting up newcannabusinessesandeager to swiftly overcome the steep learning curve that can be associated with cannabis cultivation. As experts in design and implementation of indoor cultivation environments, we atSurnamake it our business to know what is going on in the industry—and especially in new markets like California. We come to market with over 10 years of cannabis specific experience serving as partners with our clients when setting up a new facility. Due to the growing needs of theindoorcultivationmarket in the California Region,Surnahas decided to expand out of our Headquarters in Boulder, Colorado and establish a sales office in California. Trent Doucet, newly appointed Vice PresidentofBusiness Development - West Coast, will be solely focused on assisting our California clients to develop the optimum design and determine the equipment needed to maximize yield and minimize expenses. Our West Coast presence offers California specific knowledge to help you cruise through the design, licensing and build-out phases of your new facility.Contact ustoday for more information on how we can help.